Could blockchain technology boost renewables?

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New York start-up TransActive Grid enabled the first ever peer-to-peer paid transaction of energy in the USA yesterday. In doing so, the company aims to usher in a revolution in the way energy markets operate.

Traditional energy markets are based around big and expensive national and international infrastructure that favours large scale generation based on fossil fuels and nuclear. Thus far, attempts to piggy-back renewable energy into these Grids haven’t worked out well for either because of the intermittent nature of renewables on the one hand, and high infrastructure costs on the other.

A household wishing to deploy rooftop solar panels must send their relatively small amount of excess energy into the Grid, where it makes little impact on electricity prices in general because the price to end users must also cover various subsidies and the cost of compensating traditional baseload generators. If, however, there was a means of calculating the small amounts of electricity produced by each household, this could be traded locally at a significantly lower cost to the end user.

“By using blockchain technology – something originally created to run the bitcoin currency – TransActive Grid makes it possible to count up and log every unit of energy created by one of these home systems. Special software called ‘smart contracts’ then makes those units of energy available on the open market to be bought and sold in the local community, with the transactions going in the near term through PayPal.

“Users will soon define their energy requirements – choosing exactly where they buy from – or to make things even simpler the process can be automated through a hands-off self-securing control system.”

The real beauty of the TransActive system, if it can be made to work, is that it fits in with the kind of localised micro-grids that are best suited for the deployment of ‘backyard’ renewables like solar, micro-hydro and small wind turbines.